MARKET REPORT: Tim Hortons-Burger King merger talks push TSX to record high

TORONTO — The Toronto stock market closed at a record high Monday amid a potential merger involving one of Canada’s most iconic companies.

Burger King is in talks with Tim Hortons in hopes of creating a new, publicly traded company with its headquarters in Canada. With a new base in Canada, Burger King, now based in Miami, could shave its U.S. tax bill.

Such so-called tax inversions have become increasingly popular among U.S. companies trying to cut costs. The majority owner of Burger King, 3G Capital, would own the majority of shares of the new company.

It’s not known what such a deal would be worth, but both stocks surged. The prospect of Burger King racking up big tax savings helped send its shares up 19.51 per cent to US$32.40 in New York.

And Tim Hortons jumped $13.25 or 19.26 per cent to C$82.03 in Toronto as Burger King considers linking up with a very successful quick service restaurant business.

“They have an embedded base of profitability and strength that exists in the Canadian business and has been the foundation of that company and that stock for a very long time,” said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.

“It (would) create a very major player, a top three player in the quick serve space — a space obviously that McDonald’s has enjoyed the leadership in for a long time.”

The S&P/TSX composite index closed up 63.19 points to 15,598.74, held back by the gold sector as bullion prices fell back.

The Canadian dollar was off 0.3 of a cent at 91.07 cents US.

U.S. indexes were also higher, as the Dow Jones industrials ran ahead 75.65 points to 17,076.87, the Nasdaq was up 18.8 points at 4,557.35 and the S&P 500 index gained 9.54 points to a record high of 1,997.94 after earlier cracking the 2,000-mark for the first time.

Sentiment was helped along by top central bankers who said support for their economies would continue and additional help is possible.